SAP indirect access is when you use third-party or custom applications to access data held in SAP systems.
SAP indirect access and licences became infamous last year when SAP won a legal battle against long-time customer Diageo. The British multinational enterprise used its Salesforce platform to connect to its SAP systems.
SAP argued that Diageo’s customers who were stored in its Salesforce platform were technically SAP users. This meant that Diageo was massively under-licensed for some time and owed millions in damages. It was a controversial court ruling given how ambiguous SAP’s contracts are.
“Licensing of SAP systems has always been complex. Diageo was fined £54m on what might well have been a misunderstanding of SAP’s rules. We urge all SAP customers to make sure they are licensed correctly. Also, think hard about the longevity of your SAP relationship.”
Mark Smith, CEO of Support Revolution
These issues occur when customers fail to purchase licences for users accessing SAP systems through non-SAP systems. This has been a fairly standard practice for organisations so, since Diageo, many SAP customers have been wondering if they would be next.
SAP has taken steps and made announcements to try and calm their customers, but many are still worried. The advice of SAP and various user groups is to:
- Review existing contracts to ensure you aren’t liable to indirect access charges (hopefully you have good lawyers)
- Discuss the issue with the SAP account manager – which many organisations worry will also lead to lawyers
SAP’s new digital access licensing
To try and calm the situation down, SAP has now launched a new pricing model based on digital access. SAP said in a statement that the new approach:
“Differentiates between direct/human and indirect/digital access, while clarifying the rules of engagement for licensing, usage, and compliance.”
Recent SAP statement
This means that customers are only charged based on the number of system-generated records or documents created through third-party access to the SAP Digital Core. This turns the conversation from how many users do you have to how many external documents do you create?
SAP has also identified nine different types of document that can be created, then assigned a multiplier to each type to determine pricing. Customers are charged on the initial creation of each type of document (when they are created by a third-party system). There is no additional cost for reads, updates, deletes, or creation of any further documents that are automatically generated in the system.
“The ‘procure to pay’ and ‘order to cash’ scenarios will now be based on orders, which is a measurable business outcome for any business. Static read access in third-party systems is your data, and so SAP will not charge for that.”
In summary, this new licensing model is ‘document-based’ rather than ‘user-based’ and SAP hopes that it should eliminate customer concerns around falling into the same trap that Diageo did. But will it?
So is it all sorted now?
SAP now defines indirect access as ‘digital access,’ calculating your licence requirements based on the type and number of system-generated documents that are created through third-party access. So will this save or cost you money?
To understand this, you need to be able to understand:
- SAP’s various licensing models and their associated fees
- Your own system’s setup – what SAP and third-party systems you have and how they interact
- Your future roadmap – how you are developing your systems
Now if the above sounds simple, don’t be fooled – it’s not! Many organisational setups are complex, with multiple system integrations across multiple departments. The act of mapping these accurately and then applying them to SAP’s still ambiguous licensing terms can be a Herculean task.
And it doesn’t end there. Once you have this mapped out, you then need to deal with SAP.
“If you pay £1m for licences and you have electronic document interchange transactions, user transactions, and third-party transactions, SAP may say you have 100 users or 10,000 documents. There will have to be a negotiation, and it will hinge on the same arguments over whether you’re compliant or not, and if your current integrations represent human use or machine use.”
Jones goes on to question whether SAP’s new pricing strategy is just anti-competitive. It forces customers to rely entirely on its own systems to make cost savings and punishes those who use third-party tools.
Be warned: SAP has tasted blood
You may be thinking, “It’s fine. SAP isn’t as bad as Oracle. The whole Diageo thing has blown over now and SAP is being nice to us again.”
Joachim Paulini at Snow Software said in an interview that one of the bigger changes that SAP has made following this renewed licensing model is the creation of a separate audit team. Previously, SAP audits were triggered by the sales team. This was a questionable setup that often meant customers felt coerced into buying additional software to appease account managers and try to avoid unnecessary audits.
But with its new separate audit function, SAP has bolstered and empowered its audit capacity, increasing the number of people in audit and their powers. In our opinion, this will lead to an increasing number of audits being run in the future as audits will now be directly linked to revenues. Licence audits will not only become more frequent, but also a lot more thorough.
According to Paulini, businesses may have avoided extra SAP indirect access fees by making a commitment to S/4HANA, SAP’s new Cloud solution its trying to force customers onto. “It was common that if you signed a HANA contract, SAP didn’t look at indirect usage,” he says. “But this is not the case anymore. The audit team won’t care if you do or don’t intend to purchase S/4HANA.”
Is there a way to avoid this?
You can avoid the pain and uncertainty when you sign up to Support Revolution. We save you at least 50% on your SAP Support. We will also do a licence audit for your organisation, providing guidance and recommendations on your SAP licensing, and alerting you to any issues that we find.